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Cruise Line Passenger Protections to be Strengthened by FMC

The Federal Maritime Commission voted yesterday to initiate a rulemaking to strengthen protections for cruise line customer deposits and prepayments, and to reduce financial responsibility requirements for small cruise lines. Under the Commission’s regulations, cruise lines must file evidence of financial responsibility to ensure that passengers will be able to obtain refunds if their cruises are cancelled. In a 3-to-2 vote, the Commission decided to prepare a proposed rule that will increase the maximum coverage requirement from $15 million to $30 million. This update responds to inflation and the growth of the cruise industry since the current $15 million cap was set in 1990. The Commission also directed that the proposed rule should relieve smaller cruise lines by giving them credit for existing additional forms of financial protection.

Chairman Richard A. Lidinsky, Jr. stated: "I’m pleased that after twenty years of debate, we have taken this concrete step toward better protecting consumers while making our regulations fairer. No passenger who has a cruise cancelled should lose his or her deposit or prepayment. The Commission looks forward to input from the public and cruise industry as we shape these updates to our passenger protections."

The majority vote directed Staff to prepare a notice of proposed rulemaking that would:

Double the maximum coverage requirement for larger cruise lines from $15 million to $30 million, with a phase-in period of two years;

In future years, adjust the maximum coverage requirement automatically to account for inflation;

Give relief to smaller vessel operators by reducing their coverage requirements to account for alternative forms of financial protections available to their customers.

The Federal Maritime Commission is the federal agency responsible for regulating the nation’s international ocean transportation for the benefit of exporters, importers, and the American consumer. The FMC’s mission is to foster a fair, efficient, and reliable international ocean transportation system while protecting the public from unfair and deceptive practices.